The FBI took an unprecedented approach in its fight against crypto fraud by creating its own cryptocurrency to monitor suspicious activity. The tactic paid off this week with arrests across the UK, US, and Portugal.
Named NexFundAI, the FBI’s Ethereum-based token was set up to watch for fraudulent activity and catch criminals red-handed. According to the Department of Justice, eighteen individuals have now been charged with manipulating the cryptocurrency market through schemes like “wash trading” – essentially fake transactions meant to artificially boost the market value of an asset.
One of the organizations involved, called Saitama, is accused of creating its own tokens and making misleading claims, such as asserting that their tokens were protected from market manipulation. Behind the scenes, they were allegedly manipulating the market for their own benefit, secretly selling tokens for tens of millions in profits.
Jodi Cohen, special agent in charge of the FBI’s Boston Division, said the agency “took the unprecedented step of creating its very own cryptocurrency token” to identify and disrupt these schemes. The FBI described the case as a “new twist on old-school financial crime.”
The US Securities and Exchange Commission also announced charges against several crypto asset promoters, emphasizing that retail investors are often targeted by fraudulent actors in the industry. The arrests and indictments highlight the ongoing risks in the largely unregulated world of cryptocurrencies.
